Explanatory note

These Regulations amend the Individual Savings Account Regulations 1998 (S.I. 1998/1870) to exempt from tax annual bonuses that are paid to building society members who hold an Individual Savings Account (“ISA”), so far as the bonus is calculated by reference to assets in their ISA.

Regulation 1 provides for citation and commencement and regulation 2 for amendment of the Individual Savings Account Regulations 1998 (“the principal Regulations”).

Regulation 3 inserts a definition of “building society bonus” (normally excluding any bonus paid on the demutualisation of a building society) in the principal Regulations.

Regulation 4 exempts the bonus from income tax so far as it is calculated by reference to ISA assets, and provides that bonuses paid directly into the ISA do not count against annual subscription limits.

Regulation 5 similarly exempts the bonus from capital gains tax.

A Regulatory Impact Assessment has not been prepared for this instrument as it has no impact (exceeding the minimum threshold) on business, charities or voluntary bodies.